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Chapter 14

Chapter 14 Vocab

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Management Core
MGCR 331
Richard Donovan

Chapter 14 - Google in three Parts: Search, Online Advertising, and Beyond Key Info and Terms - Advertising drives Google’s profits o Has grown to earn more annual advertising dollars than any U.S. media company - 76% of the search advertising business + AdSense network + DoubleClick = the firm controls the majority of all online advertising dollars. - Market capitalization: the value of a firm calculated by multiplying its share price by the number of shares --- > makes Google the most valuable media company on the planet. - Majority of revenue comes from advertising, but the firm is also now engaged in a “wide-ranging multi-front war” – mobile, browsers, etc. - Success of existing business = massive cash horde --- > fuels experimentation, innovation, tolerate failure, acquire aggressively, and patiently build new markets. - Google uses PageRank to rank relevance of websites o Google does not accept money for placement of links in search results o Web pages that have more pages linking to them are ranked higher - Search engine optimization: the process of improving a page’s organic search results - Link fraud: creating a series of bogus web sites that link back to the pages they’re trying to promote (and making the website appear higher on searches) - Not searching the entire web, searching a copy of the web that is made by Google – an index - uses software to uncover as much information as they can find – spiders, Web crawlers, software robots. - Can add firewalls, code, or corporate firewalls to keep Google out - Three factors driving online ad growth trends o 1. Increased user time online  advertisers are simply following the market o 2. Improved measurement and accountability  impressions: each time an ad is served to a user for viewing -- - > now companies can track how effective their advertising instead of guessing. Can see the clicks and the product purchases or other Web site activity that comes from those clicks. o 3. Targeting  can target consumers based on how they respond to ads - search engine marketing: the practice of running and optimizing search engine ad campaigns. - Google uses mainly text ads – keyword advertising: they’re targeted based on the words in a user’s search query. o Show up when a user has a purchasing intent -- > makes the ads much more effective than standard display ads like those on FB. o Advertisers only pay for results --- they are pay-per-click / cost-per- click, where advertisers don’t pay unless someone clicks on their ad. - Google AdWords advertising account – set up in minutes – specify what they want to pay every time an ad is clicked, what their budget is, and they can also control other parameters. - Precise ad ranking formula o Ad Rank = Maximum CPC x Quality Score  Quality score --- one factor is the click-through rate: the number of users who clicked an ad divided by the number of times the ad was delivered. - Geo-targeting: when computer systems identify a user’s physical location for the purpose of delivering tailored ads or other content. o Advertisers can specify that their ads only appear for Web surfers located in a particular area - IP address --- > ads in G oogle search are geotargeted - Proxy servers: a third-party computer that pauses traffic to and from a specific address without revealing the address of the connected user --- > hides locations. - About 30% of Google’s revenues come from running ads on Web sites tha
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